No. 90-587 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1992 

JAY ANDERSON, 

Claimant, Respondent, 

and Cross-Appellant, 

JERRY D. HAMMER and 

STATE COMPENSATION MUTUAL 

INSURANCE FUND, 

Defendant, Appellant, 

and Cross-Respondent. 

APPEAL FROM: Workers8 Compensation Court, 

The Honorable Timothy W. Reardon, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant and Cross-Respondent: 

Kelly M. OfSullivan, Agency Legal Services 

Bureau, Helena, Montana. 

For Respondent and Cross-Appellant: 

Chris J. Ragar, Beck Law Offices, 

Bozeman, Montana. 

Filed: 

Submitted: January 14, 1992 

Decided: February 21, 1992 

Clerk 
Justice William E. Hunt, Sr., delivered the opinion of the Court. 

The original opinion in this case, dated September 16, 1991, 

and filed that same date, was withdrawn on November 22, 1991. We 

hereby clarify that original opinion. 

The Workers1 Compensation Court awarded claimant 500 weeks of 

permanent partial disability benefits at the rate of $57.86 per 

week. Both claimant and the State Fund appeal. 

We reverse and remand as to issues one and three. We affirm 

issue two. 

Claimant raises the following issue: 

1. Whether in computing lost earning capacity, the Workers1 

compensation Court erroneously compared 1981 "old dollarsw to 1990 

l1new dollars9I without updating the 1981 figures. 

The State Fund raises two additional issues: 

2. Whether the Workers1 Compensation Court erred in finding 

that claimant suffered a whole person injury and therefore was 

entitled to 500 weeks of benefits. 

3. Whether the Workers1 Compensation Court erred in failing 

to include the value of room and board provided to claimant by his 

employer as part of his compensation in the calculation of his 

post-injury wages. 

Claimant Jay Anderson, a cowboy, maintained a sporadic and 

short term pre-injury work history. He worked as a laborer in the 

summer months for his uncles as a block layer and carpenter. He was 

not fully apprenticed in either occupation. He sheared sheep for 

his father for approximately two months a year. In 1979, claimant 
began working for the Peavey Company as a feed plant operator. He 

worked in that position for about two and one-half years. His 

ending salary was $5.35 per hour. 

In 1981, claimant began working as a ranch hand for Mr. 

Hammer. His typical duties included fencing, calving, herding 

cattle, and repairing bridges. On July 23, 1986, while trying to 

round up a stray calf, claimant fell from his horse. The horse 

rolled on top of him, fracturing his left upper arm. At the time 

of the injury, claimant was earning $650 per month. In addition to 

a monthly salary, Hammer provided claimant with fringe benefits 

which included a mobile home, lunches, one-half of a beef per year, 

and some pasturage for claimant's horse. 

Claimant's x-rays revealed a comminuted fracture through the 

mid-shaft of the left humerus. Dr. Frank Humberger, an orthopedic 

surgeon, noted radial nerve palsy of the left arm. On July 24, 

1986, Dr. Humberger performed surgery on claimant's left humerus to 

stabilize the bone. Claimant's arm failed to heal properly. In 

April 1988, Dr. Humberger performed a successful bone graft to 

stimulate healing. Subsequently, claimant's humerus healed. 

However, claimant developed significant problems with the radial 

nerve. He experienced numbness and considerable pain in the left 

upper extremity. Claimant continued to work for Hammer but has had 

significant pain when performing his tasks. 

Dr. Humberger stated that claimant has residual problems in 

his shoulder consisting of bicipital tendonitis, significant 

symptoms of rotator cuff tendonitis, and symptoms of subacromial 
bursitis. He also testified that claimant will continue to have 

permanent residual problems from the arm injury and that claimant 

has reached maximum healing with regard to his injury. 

The State Fund's witness, Dr. Canty, assigned an impairment 

rating of 15 percent permanent partial impairment of the upper left 

extremity. This represented a nine percent permanent partial 

impairment of the whole person. Based on this conclusion, the 

State Fund paid a Holton award of 45 weeks at claimant's permanent 

partial disability rate of $149.50 per week. Dr. Canty did not 

disagree with Dr. Humberger's deposition and he agreed that the 

orthopedic surgeon should ultimately decide what the claimant could 

and could not do for employment activities. 

Gary Lusin, a licensed physical therapist, examined claimant 

on November 3 and December 13, 1989, to prepare a Functional 

Capabilities Assessment (FCA). The FCA qualified claimant for the 

medium physical demand level. The medium range required lifting 

50 to 75 pounds on an occasional basis, 20 pounds frequently, and 

10 pounds constantly. Claimant just met the lower threshold 

requirement of the medium physical demand level. In Mr. Lusints 

opinion, claimant had a limited range of motion of combination 

shoulder flexion and abduction, and limited external rotation of 

the left shoulder. He found visible and palpable atrophy over the 

infraspinatus, teres minor, trapezius, and pectoralis, and weakness 

throughout the rotator cuff muscles. 

Norm Johnson, an employment counselor, met with claimant and 

reviewed the depositions of claimant, Drs. Humberger and Canty, 
Jerry Hammer, Gary Lusin, and Karen Black. Johnson administered 

the General ~ptitude Test Battery to claimant. The results of the 

test demonstrated that claimant would be slow in jobs requiring 

numerical skills and hearing skills, as well as general learning 

skills and reasoning ability. Johnson concluded claimant has a 

pre-injury earning capacity at Peavey in Miles City of $7.10 per 

hour, plus $1.56 per hour in fringe benefits, with seven years 

experience. Johnson's contact with an individual at Peavey (now 

Con Agra) indicated that entry level employees started at $5.00 per 

hour and went up to $5.50 per hour after 60 days. 

Karen Black, a vocational expert, contacted a personnel 

officer who stated that a feed plant operator earned from $6.00 per 

hour to $6.50 per hour at the entry level. Black testified she did 

not know what claimant Is pre-injury earning capacity was. She also 

did not estimate claimant 's decrease of access to the labor market. 

She concurred that claimant's current employment should be limited 

within the range of the FCA. 

On August 27, 1990, the Workers ' Compensation Court issued its 

findings. The court concluded that as a result of his injury, 

claimant's ability to earn in the open labor market had been 

substantially reduced. The court concluded claimant was entitled 

to 500 weeks of permanent partial disability benefits at the rate 

of $31.00 per week because he suffered an injury to the whole 

person and not just to his left arm. The court rejected claimant 's 

lost earning capacity based upon jobs as a construction laborer or 

hod carrier because claimant lacked experience in those areas. 
In the original order, the court made a mathematical error 

with regard to claimant's pre-injury wage. The claimant moved to 

amend the decision and requested a rehearing, asking the court to 

reconcile its finding of Peavey pre-injury wages of $5.35 per hour, 

with its later conclusion that claimant earned $5.25 per hour to 

correct a mathematical error, and to update the claimant's 1981 

Peavey wages to the present time for the purposes of pre-injury 

earning capacity. The court amended its earlier decision by 

finding that claimant's Peavey wages were $5.35 per hour and that 

claimant's lost earning capacity is $2.15 per hour. The court 

granted claimant 500 weeks of benefits at $57.36 per week, but 

refused to update claimant's 1981 wages to 1990 and denied the 

rehearing. Both claimant and the State Fund appealed from the 

original and amended order. 

On September 16, 1991, this Court issued an opinion which 

reversed and remanded on issue one and affirmed as to issues two 

and three. In the original opinion, we held that the value of room 

and board provided by the employer should not be included in the 

calculation of claimant s post-injury wages. On September 30, 

1991, the State Fund petitioned this Court for a rehearing on this 

issue. On November 22, 1991, this Court granted the petition for 

rehearing and classified this case for oral argument. Oral 

argument was limited to discussion of whether the value of room and 

board provided by the employer should be included in the 

calculation of claimant's post-injury wages. On January 9, 1992, 
this Court, sitting en banc, heard oral argument. We now issue the 

following opinion. 

Whether in computing lost earning capacity, the Workers1 

Compensation Court erroneously compared 1981 "old dollarsw to 1990 

"new dollarsw without updating the 1981 figures. 

Because the injury occurred prior to 1987, pre-1987 statutory 

and case law applies. Watson v. Seeking (1988), 234 Mont. 309, 

We will not disturb a decision by the Workers1 Compensation 

Court where there is substantial credible evidence to support the 

findings of the court. Dunn v. Champion International Corp. 

(1986), 222 Mont. 142, 147, 720 P.2d 1186, 1189. Claimant argues 

that the court failed to bring his pre-injury earning capacity of 

$5.35 per hour in 1981 to 1990 wage levels. We agree. As we have 

previously stated: 

"The ultimate objective of the disability test is by 

discounting the above variables to determine the wage 

that would have been paid in the open labor market under 

normal employment conditions to claimant as injured, 

taking wage levels, hours of work, and claimant I s age and 

state of training as of exactly the same period used for 

calculating actual wages earned before the injury.I1 

McDanold v. B.N. Transport, Inc. (1984), 208 Mont. 470, 480, 679 

P. 2d 1188, 1193 (quoting Fermo v. Superline Products (1978) , 175 

Mont. 345, 349, 574 P.2d 251, 253). 

The court found claimantls pre-injury earning capacity at 

Peavey to be $5.35 per hour and his post-injury earning capacity to 

be $3.20 per hour. The court then subtracted the 1990 post-injury 
earning capacity from the 1981 pre-injury earning capacity to find 

claimant's lost earning capacity. "This method is a misapplication 

of the law in Olson [v. Manion's Inc. (1973), 162 Mont. 197, 510 

P.2d 61 and directly contradicts later holdings of this Court that 

pre-injury and post-injury wages must be compared for the same 

period of time." McDanold, 679 P.2d at 1193. It is patently 

unfair to compare wages in 1990 to wages in 1981. McDanold, 679 

P.2d at 1193. The court should take into account increases in 

wages during the periods of pre-injury earning capacity and 

post-injury earning capacity. 

[Elarning capacity must be measured by comparing 

pre-injury earning capacity with post-injury earning 

capacity in the same time frame. So, in order to properly 

calculate claimant's permanent partial disability rate, 

we would need to know what the job claimant held in 

September of 1978 would pay today. No evidence was 

presented as to that pay rate. 

Lamb v. Missoula Imports, Inc. (1988), 230 Mont. 183, 198, 748 P.2d 

965, 967. 

Here evidence indicated that claimant's wages increased over 

the last nine years. Norm Johnson testified by deposition that 

Peavey would pay $7.10 per hour, plus fringe benefits, after seven 

years of experience. He also testified that his contacts with 

Peavey indicated entry level employees started at $5.00 per hour 

and increased to $5.50 per hour after 60 days. Karen Black 

testified that entry level jobs at Peavey would pay between $6.00 

and $6.50 per hour. In addition, claimant testified he received 

pay raises over his two and one-half years of working at Peavey. 
There is no evidence that Peavey wages have remained static over 

nine years. Therefore, the court must determine what claimant 

would have earned in 1990 as a plant operator. 

Claimant requested that this Court issue a finding regarding 

claimant's pre-injury wage because the evidence comes from 

deposition testimony. Dunn, 720 P. 2d at 1189. We decline to do so 

because of the conflicting nature of the testimony regarding 

claimant's pre-injury wage. Instead, we remand to the Workers' 

Compensation Court to determine claimant's pre-injury earning 

capacity. 

Whether the Workers' Compensation Court erred in finding that 

claimant suffered a whole person injury and therefore was entitled 

to 500 weeks of benefits. 

The State Fund relied primarily on 5 39-71-705(1), MCA (1985), 

which reads as follows: 

(1) In addition to temporary total disability benefits 

allowed in this chapter, indemnity benefits for loss of 

a member shall be paid at the weekly rate provided in 

39-71-703 and shall be paid for the following periods: 

one arm at or near shoulder. .................. 280 weeks . . . . 

The court held that claimant was permanently partially 

disabled and entitled to 500 weeks of permanent partial disability 

benefits because the injury was not limited to the arm and shoulder 

area, but to the "whole person." There is substantial credible 

evidence to support the court's finding. Dr. Humberger stated that 

claimant continued to experience intermittent problems of pain 
associated with the radial nerve injury. The radial nerve is 

easily reinjured whenever claimant bumps the arm. Claimant 

complained of pain over the apex of the shoulder and over the 

shoulder blade. He complained of pain in and about the shoulder 

when lifting and carrying. The soft tissue injuries claimant 

suffered are permanent. The doctor stated claimant has had 

symptoms of bicipital tendonitis, rotator cuff tendonitis, and 

symptoms suggestive of subacromial bursitis. Claimant would 

continue to have residual problems. The doctor stated that these 

symptoms were a result of the accident in 1986. 

Mr. Lusin testified that claimant suffered from atrophy in the 

infraspinatus, teres minor, upper trapezius, and pectoralis. 

Claimant's FCA report confirmed claimant's weakness in the left 

shoulder and upper extremity which appear to be a result from the 

injury. The State Fund's witness, Dr. Canty, did not disagree with 

Dr. Hurnberger's opinion with regard to claimant's injury. 

Claimant's testimony was consistent with the conclusions of 

the doctor and physical therapist. He stated his chest muscles 

would start tightening up and aching. He had pain in and around 

the shoulder area. 

The State Fund argued that Obie v. Obie Sons, Inc. (1963), 143 

Mont. 1, 386 P.2d 68, was controlling. In that case, we overturned 

a district court's finding on appeal from the Industrial Accident 

Board that claimant was entitled to 500 weeks of benefits because 

the court did not have any additional evidence relating to the 

physical condition of the claimant. In this case, we will not 
disturb the Workers1 Compensation Court's findings where there is 

substantial evidence to support those findings. Dunn, 720 P.2d at 

1189. We conclude that there is substantial evidence to uphold the 

Workers' Compensation Court's finding of a whole person injury. 

I11 

Whether the Workersf Compensation Court erred in failing to 

include the value of room and board provided to claimant by his 

employer as part of his compensation in the calculation of his 

post-injury wages. 

In determining claimant's post-injury earning capacity, the 

Workers' Compensation Court used claimant's $750 monthly salary and 

did not include room and board. The court arrived at $3.20 per 

hour as claimant's post-injury earning capacity. 

The relevant statute is 5 39-71-116(20), MCA (1985), which 

defines wages as: 

[Tlhe average gross earnings received by the employee at 

the time of the injury for the usual hours of employment 

in a week, and overtime is not to be considered. Sick 

leave benefits accrued by employees of public 

corporations, as defined by subsection (16) of this 

section, are considered wages. 

Previously, we have interpreted this definition of Nwages'l as 

simply meaning gross earnings. Scyphers v. H & H Lumber (1988), 

237 Mont. 424, 426, 774 P.2d 393, 394. In Scvphers, this Court 

adopted the economic gain standard in determining what constituted 

gross income. Scvphers, 774 P.2d at 394. The distinction rested 

upon whether the payment was actually a reimbursement for 

employment-related expenses, or whether the payment consisted of a 
real economic gain to the employee. Scvphers, 774 P.2d at 394. We 

approved of the analysis as described by Professor Larson in his 

treatise on workersr compensation: 

In computing actual earnings as the beginning point of 

wage-basis calculations, there should be included not 

only wages and salary but any thing of value received as 

consideration for the work, as, for example, tips, 

bonuses, commissions and room and board, constituting 

real economic gain to the employee. [Emphasis added.] 

2 Larson, The Law of Workmenst Compensation, 5 60.12(a) (1989). 

In Scvwhers, the claimant, a long haul truck driver, was 

compensated by the employer at a rate of $0.14 per mile, plus $0.03 

per mile "per diem." The claimant was not required to keep records 

of expenses for meals and lodging. Instead, the employer simply 

paid the I1per diem" amount. We concluded that the three-cents-per 

mile "per diemM was not a reimbursement to the injured employee for 

out of pocket expenses, but instead constituted real economic gain. 

Scvwhers, 774 P.2d at 394-95. 

The Court notes that in 1987 the legislature enacted 

5 39-71-123, MCA, providing that ll[w]ages include but are not 

limited to . . . (b) board, lodging, rent, or housing if it 

constitutes a part of the employee's remuneration and is based on 

its actual value . . . . II 

In this instance, room and board was provided to claimant as 

partial compensation for working on the ranch. The room and board 

was not a reimbursement to the claimant for out-of-pocket expenses, 

rather it constituted a real economic gain to the claimant. We 

hold that the value of the room and board constituted gross 
earnings and that it be included in claimant's post-injury wages. 

We affirm as to issue two. We reverse and remand issues one and 

three to the Workerst Compensation Court to determine claimant's 

pre-injury earning capacity, and if possible on the record before 

it, the value of the room and board. 

We concur: 

4w<w~ 

Chief Justice 
Justice Terry N. Trieweiler specially concurring. 

I concur with the result of the majority opinion, but do not 

agree with all that is said in part I11 of that opinion. 

Specifically, I disagree that 5 39-71-116(20), MCA (1985), is 

the relevant statute under which to analyze claimant's disability 

benefits pursuant to 1 39-71-703, MCA (1985). partial disability 

benefits, pursuant to § 703, are based upon the difference between 

pre-injury and post-injury "earning capacity. " Wages are only one 

factor to be considered and are not determinative of either preinjury or post-injury capacity. However, I agree that the value of 

claimant's room and board were relevant to a determination of 

claimant's post-injury earning capacity, just as it is relevant to 

a determination of his pre-injury earning capacity. 

I also fully agree with the Court's decision in Issues I 

and I1 of its opinion.